How The Big Short Actually Worked 

Infamous means more than famous . To be IN famous

@JBG1968 Sorry but it doesn't.

​@@JBG1968this guy's probably the biggest thing coming out of Mexico!

​@@JBG1968 Infamous is defined as being known for bad quality or a bad deed.

Terms are also used figuratively or ironically….short sellers of all types are often erroneously viewed as being bad.

@Daniel Hale me too ,i liked it when the parties insulted each other ,people worth millions are no different to us mere mortals :} these Masters of the Universe so called, my other fav is Margin call with the Fab Jeremy Irons :}

Inside Job documentary on the subject 👌

It makes sense out of a trade system designed not to make any logical sense, because it doesn't...The mortgage backed securities market is simply creating a communist housing economy, then selling it on the free market...For property that no one actually ownes (including the banks), that literally created the $ for the loans out of thin air...

I've read articles of investors who mentioned Janet Lindsey and her consistency in making lots of money from crypto..

Everyone here is a bot. Do not follow any advice or comments here.

How or why is that crazy? lol

​@@justaweeb14688indeed. It'd be a serious mistake.

I’ve read articles from Janet Herp and she says buying options in bio tech companies awaiting FDA approval is the safest way to grow your money.

It explicitly states in the book Dr. Burry rejected the 2:20 payment structure and only took fees on profits generated

Oh, thank you so much! Because I understood the entire financial inception except for one detail: How can the B buckets be "risky investments" if MBS had to pay out a fixed amount to their investors, and they had CDS as "insurance" in case they couldn't? That would eliminate the risk. Now that you clarified that Swaps weren't in the industry of MBS that makes much more sense.

Thanks! So they did exist in the CDO market but not in the MBS market? What products was AIG's CDS market in relation to?

@@Hamboarding no cdo market was made later and did not have cds but burry asked for it to be made

That’s a lot of serious misses by the content creator. Enough to say that it was at least just as misleading as the movie that he’s criticizing.

I watched the movie but never really understood CDS until this comment. The fact that you don't need to own the mortage to buy its CDS is the last piece I've been missing. Thank you. Edit: Watched the video😂

@@kristijanmadhukar516 Yeah, it's called a naked CDS, where neither the writer nor purchaser of the swap agreement actually owns the underlying bond. It's a highly unusual contract, but since investment banks were confident the housing market wouldn't fail, they were comfortable selling those swaps.

Well you need to read more. As the loan was backed by taxpayers ie the Insurance holder on the loans..And the rating companies told the public the loans "Was sound" The movie just exposed the fraud. The Government created.

In a world with perfect information, allowing shorts will temper prices for overpriced assets. The big problem was the derivative market wasn't well regulated so no one really knew what everyone had while selling these things. Believe it or not, shorting stabilizes prices when regulated properly.

Yes but it's not quite the same.It's like a stock option. It's not really insurance even though insurance language is used probably to cover up the fact that it's more like a casino bet. An option is just a contract(in everyday terms we call it a bet but the contract makes the terms legally enforceable)between two investors about what will happen to an asset in the future. In your example you wouldn't have any access to the home or a way to burn it down. However,you're still stuck paying those premiums every month for however long the bet is. If what you're betting on doesn't happen before the term ends then you're out of that money. You lose. If it does(house burns down) then you get to collect on it. The owner loses. You can get on any stock trading site right now and do the same without owning a single stock. Just as long as you have the money to pay the premiums. If you bet a stock will rise above a certain amount by a certain date and it does you win....if it doesn't then you lose the premium you paid and the owner of the stock you're betting on or against gets it. However,one investor really can't singlehandedly force a stock to rise or fall in order for him to win a bet. Without some insider trading info(which is illegal) there is no way to be 100% sure what a stock is gonna do and no way to force it to do what you want.

Then these same businesses turned around and shit on individuals who did the same thing during covid with a stimulus check. Smh.

The government made a profit on the money they gave out

The thought process, right or wrong, is that if they don't give bonuses, the top execs (assumed brain trust) will leave and do other things and the bail out that was just handed out will be futile as no one will be around to lead them out of the mess. My opinion is that, sure, you can think that way, but you trust the same people who led them into the mess to lead them out? If you don't bail out, then trust in the US financial system craters and an even worse recession happens. There are no good answers.

As one of the characters in Aaron Sorkin’s The Newsroom says (and I’m paraphrasing), “you keep saying people should go to jail, but for the life of my I cannot figure out what laws they broke”.

@@drivingmecrazyinla9457 As a layperson, I agree with your embedded comment there -- you have a layer of executives who have created and worked within a system that would have put us into another Great Depression if the government hadn't gone into emergency mode and thrown a huge amount of money into it, and we'll be dealing with the repercussions of those emergency measures for decades. But the crisis made us even more susceptible (because we were afraid) to trusting those "experts". The sudden dangerous situation meant we were afraid to swap horses midstream, even when the horses were causing the problem in the first place. Watching the Senate interview with the CEO of Kroger when he was getting his merger rubber stamped (the guy who gave himself $20 million while cutting post-COVID wages for workers, whose executive decisions included firing anyone not wearing his preferred messages on their aprons), this guy and "brain trust" don't go together. From a distance, it seems obvious they aren't the smartest guys in the room, they just know how to work the room -- leveraging privilege and credentials in a system of mutual graft. There's nothing about a free market system that would produce the kind of dysfunction you see in the executive layers of American business.

There are strategies that could be put in place for solid gains regardless of economy or market condition, but such executions are usually carried out by investment experts or advisors with experience

A lot of folks downplay the role of advlsors until being burnt by their own emotions. I remember couple summers back, after my lengthy divorce, I needed a good boost to help my business stay afloat, hence I researched for licensed advisors and came across someone of utmost qualifications. She's helped grow my reserve notwithstanding inflation, from $275k to $850K

This is definitely considerable! think you could suggest any professional/advisors i can get on the phone with? i'm in dire need of proper portfolio allocation

Viviana Marisa Coelho is her name. She is regarded as a genius in her area and works for Empower Financial Services. By looking her up online, you can quickly verify her level of experience. She is well knowledgeable about financial markets.

She appears to be well-educated and well-read. I ran an online search on her name and came across her website; thank you for sharing.

It's actually called "Liar's Poker" and yes, it is a great book.

@@bti2270 Yes! corrected, thnks!

His other book When Genius Failed-about Long Term Capital Management- is an amazing read as well.

He's just all around a great author

Sorta like wolf of wall street

'It was a gully'.

Despite my confidence in your advice, my recent stock purchases, and the fact that I am an AMC shareholder, I haven't been able to accumulate anything. I had already been in the hole for too long prior to the downturn. What's the investing procedure?

With Ruth Loralann Brennan’s guidance, I've been investing for a while, and I couldn't be happier. Her company offers the broadest financial guidance currently accessible, has given me the best ROI while safeguarding my capital. It never squanders my money on dangerous speculation or poor risk-management techniques.

@James Cooper Check up on Ruth; in 2020, she attracted a lot of attention. I'm not sure whether I have permission to say anything, but... okay. She acts as my mentor and manages my portfolio.

@@danieljackson87 I looked up Ruth's profile online since I was curious. I saw her website, her credentials, and how tight she came across. At first, I thought this was overblown nonsense.

And here came the comment that start a thread about some amazing financial advisor. Beware of fake gurus ads in comment section.

Consistently investing in high quality dividend paying REITs & companies over the long term is a relatively easy strategy to create generational wealth. My "boring" REITs portfolio paid me over $4,000 in dividends last month.

It's time to make high value games! Discounted dividend stocks. Ever grateful to my CFP "Eileen Ruth Sparks", I now have a six-figure REIT portfolio, which includes, but is not limited to; AMT, SPG & PSA.... I now have 606 shares of AMT which pays dividends of $3800 per year.

I want to play the long term game with well diversified fund. Please how can i reach this CFP of yours?

Most likely, you can find her basic information online; you are welcome to do further study.

Thanks for this tip. Her website popped up on the first page immediately I searched her, I read through her resume and it seems pretty tight. So, I dropped a message & hopefully she replies soon.

Two different types of movies

@@dinocrest1946 People often use that argument to defend a movie that is still vastly inferior. Spiderman 3 (the Sam Rami one) and Spiderman: Into the Spiderverse are also two very diffirent kinds of films. But the latter still crushes the former.

That's an egregiously low threshold.

@@daysandwordsGonna cry? … But seriously, I agree with spiderverse.

You guys cant even stick to one set of similar movies 😂

Since the crash, I've been in the red. I’m playing the long term game, so I'm not too worried but Jim Cramer mentioned there are still a lot of great opportunities, though stocks has been down a lot. I also heard news of a guy that made $250k from about $110k since the crash and I would really look to know how to go about this.

There are actually a lot of ways to make high yields in a crisis, but such trades are best done under the supervision of Financial advisor.

Thats true, I've been getting assisted by a FA for almost a year now, I started out with less than $200K and I'm just $19,000 short of half a million in profit.

Impressive can you share more info?

My advisor is ‘’Catherine Morrison Evans’’ she’s highly qualified and experienced in the financial market. She has extensive knowledge of portfolio diversity and is considered an expert in the field. I recommend researching her credentials further. She has many years of experience and is a valuable resource for anyone looking to navigate the financial market

Government doesn't make loan underwriting calls. When the secindary mtge market was only the quasi- governmental FNMA, yes they set the bar. But as the secondary market became privatized, this ended the role of government as rule maker in the mtge origination market (not entirely tho, FHA and VA mtges are still significant chunks of home mortgages - but less than 10% total). Yeah, can't blame govt (except for no one going to jail).

@@henrybutchy3242 bull shit Government do goodism is to blame!! Too many poor people were denied loans…..horrors!!! So they stopped regulating and guess what poor people got loans…and we all lost because poor people failed to pay. Haha. OBAMA made his first million suing Bank America for red lining. Guess what? All his clients defaulted in 5 years. Democrats failed again as all progressives do

Dude me too! Let's hope it's better than his book at high-frequency/high-speed/algorithmic trading, which lacked basic facts and common sense. What made the big short fantastic was that it was non-fiction, presented in a cohesive, entertaining fashion. It got me interested in finance haha

Find stocks with market-beating yields and shares that at least keep pace with the market for a long term. For a successful long-term strategy I recommend you seek the guidance a broker or financial advisor.

Very true , I diversified my $400K portfolio across multiple market with the aid of an investment advisor, I have been able to generate over $900k in net profit across high dividend yield stocks, ETF and bonds in few months.

@@Charlescarbajal971 .wow ,that’s stirring! Do you mind connecting me to your advisor please. I desperately need one to diversified my portfolio.

You can do your research and be on the lookout for one with intelligent strategies who'll help your portfolio maintain an unwavering and a progressive growth. Diana Luise Hines is my FA. She has the Flexibility & Expertise to Meet Your Needs. Verify her yourself

@@Charlescarbajal971 Thank you for this tip. it was easy to find your coach. Did my due diligence on her before scheduling a phone call with her. She seems proficient considering her résumé.

Find quality stocks that have long term potential, and ride with those stocks. I have found it takes someone who is very familiar with the market to make such good picks

I agree with you. I started out with investing on my own, but I lost a lot of money. I was able to pull out about $200k after the 2020 crash. I invested the money using an analyst, and in seven months, I raked in almost $673,000

@@SethDonald-mf4vm I agree with you. I started out with investing on my own, but I lost a lot of money. I was able to pull out about $200k after the 2020 crash. I invested the money using an analyst, and in seven months, I raked in almost $673,000

@@ChristopherHoward-kf7yk Please will you be kind enough to share the details of the man that helped you?

@@DylanMoore-cb7if Actually its a Lady. Yes my go to person is a "Monica Shawn Marti". So easy and compassionate Lady. You should take a look at her work

Patrick Boyle lacks taste in good music

@@HowMoneyWorks no u

@@HowMoneyWorks Do you have problems with your ears?

I can't believe he traumatized our man Patrick like that. Does his mother know what kind of monster she's raised?

@@HowMoneyWorks hahahah!!

Spot on!!

After this happened there were only four AAA rated banks left in the world, the largest Australian banks. The heavy regulations they operated under prevented them from doing any thing stupid. Strange how American banks didn't ask for more regulation after they lost so much.

That was the point of the movie, to absolve the gov. Hollywood is a propaganda machine.

That wasn't the vid's primary purpose.

For that half of the story, watch the movie Too Big To Fail.

Margin call had almost no detail of what went wrong. Huge difference from Big short.

@@tubewacha true. I really wanna see what is in Eric Dale’s USB drive visually

Remember rules work differently for rich

@@eavyeavy2864 what does this have to do with rules for the rich?

Too Big To Fail is also a gem

That’s true , I’ve been getting assisted by ‘Margaret Johnson Arndt’ for almost a year now , I started out less than $200k and I’m just $19,000 short of half a million in profits.

I am being advised by Margaret Johnson Arndt, an experienced financial professional. If you're interested, you can easily find more information about her as she has accumulated years of expertise in the financial market.

Certainty eludes everyone; thus, it's vital to establish your own methodology, handle risk, and adhere to your strategy unwaveringly. This commitment should endure challenges and successes, all while maintaining a commitment to ongoing learning and improvement.

@@DeannaPeters-lz8we Who is the professional who is advising you, if you could perhaps tell us? As a novice investing in stocks without the correct direction of a professional, I have lost a lot of money.

Thanks for sharing, needed this myself. I just looked her page up online and I would say she really does have an impressive background on investing.

You keep thinking that. As the markets are rigged these days. As they use taxpayers money to bail them out. Why most people that had these CDS never got paid. The Government used your money to bail out the losers.

While i agree. The world is run by landlords. Youd need serious political upheaval to get it implemented

The rating agencies (S&P and Moodys) were giving CDOs artificially high ratings even though they were full of very very high risk mortgages. They did this knowingly. Those who were in on it at the banks and these agencies committed fraud, and should have gone to prison for it, but never did. Also, mortgage lenders were handing out loans to people who they *knew* were unable to pay. They would allow the borrowers to put any income, etc. they wanted on the loan applications and looked the other way. This is also fraud, and those responsible should have gone to prison, but again, none ever did. The game is rigged. Everyone in the game knows it. It is just how the world works, and what will ultimately lead to the collapse of the entire system. It *always* does eventually...

Exactly. the govt gutted the risk assessment in the market in order to spur growth by essentially backing the mortgages with the tax dollar ie bailout

Credit rating could have put a stop to all of this collapse, but there is no liability on a credit rating. It’s an opinion. You can’t jail your grocer if he said the oranges taste great but you think it’s terrible. But folks treated the ratings as gospel

@@chowsquid The credit rating agencies did much more than just have a "bad opinion" - They knew the instruments were full of bad mortgages, yet rated them however the banks told them to anyway in exchange for their business aka for money. That is conspiracy to defraud no matter how you look at it.

So what you're saying is there's absolutely no reason for Wall Street or the government not to do it again. I mean, what was the worst of it? Occupy Wall Street? A bunch of people camped outside banging drums for a 3 months? I remember video footage of investors high up in the building looking and laughing.

The movie was accurate but apparently Michael didn't "invent" the finantial instrument since the banks were already using it at the time.

He didn't invent CDS. But he was the first to buy them against CDOs.

Mars Junction got robbed of a Grammy

@@HowMoneyWorks Mars Junction was robbed of talent.

@@scottn7cy LOL

Facts 💯

Well depending on if multiple people living there are making 50K and all paying to live there each year...

It's ridiculously obvious we are in another bubble (several, actually -- Real estate, but then higher ed is likely to burst soon, also), but just like last time everyone I say that to in my community thinks I'm nuts. It's shocking how people are able to not see what they don't want to see.

I’m a realtor no one is being approved for 300k with 50k u need 85k for that homes are going up cuz companies are buying them instead of ppl

I don't think higher Ed is popping anytime soon, huge business model, will not br allowed to fail​@@Ryan-zv6xw

Excellent analysis!!!

Often, mortgage brokers were filling out loan applications for borrowers (who had, up to that point, told the truth about their income) - and the broker would quietly plug in whatever income level was needed to qualify for the loan! Borrowers wouldn’t even see the application with the false info until they were seated at the closing table signing a stack of legal documents. For most borrowers, at that point, it felt rather late in the process to pull out of the deal-if they even noticed the discrepancy.

_I may have been a decade early but I wasn't wrong._

Wrong on timing. There’s a saying in short positions. “The market can be wrong longer than you can stay solvent” If the bubble dragged on longer, m.burry could have been insolvent and have to dissolve his fund with big losses.

974k now

The bucket situation is the reason why the insurance is taken out. So the bucket situation happens before and to protect themselves the buyers take out the insurance against the possibility that the buckets won't get filled.😁

And that was the most common way for CDS's to be sold: to bond holders and lenders to insure the loans they were issuing. But these banks were so certain that the housing market would not collapse that they were comfortable selling "naked" CDS's to these investors.

It’s banks selling insurance on something they have no idea how to insure. Imagine a P&C selling insurance assuming things don’t catch fire or ain’t no such thing as hurricanes 🎶….or pandemics.

In this context, he could be either...He is both the "hero", and the "villian"...A "hero", for exposing the blatant corruption of others, and the "villian", for destroying many (what were once) very stable investment funds...Imagine you invested in Goldman, for a paltry %5 annual return, and the bank fails; Taking everything in two days...? That is only supposed to happen to people that bet on 0TDE option calls; Not in accts with a %5 annual ROE...This was the true meaning of "too big to fail"...Too large of a trade % descrepancy not to sink the house. Can hear those calls, now: "How can this happen when the odds were so far my favor???" "How was this NOT priced into the ROI???" "If this were even a slight possibility, I could expect at least %25 return for my wager!!!"

You're not alone; CDO investors didn't understand them either.

@whatsappme121 absolutely not!

You ever seen a commercial for 'easy finance'? Those dodgy mofos

Let's pretend you wanted to be a homebuyer in 2004: You would get to the local bank and take out a mortgage and buy a home. You were obligated to pay a monthly amount until you paid off the whole loan. The local bank would sell your loan (you would still pay to them, but they would wire the money to the loan buyer) and a big bank would buy it. They clumped thousands of bought loans into packages and sold them to investment companies (to use the money to buy more loans like yours). The hedgefunds and investment companies bought them so they would get a return on the amount given (e.g. gave 10 mil and expected 15 mil back). Having 1000 different loans in the same pack, meant that if some of the mortgages (like yours) would default, the interest from the others + the value of the sold house would cover the losses and still turned a profit. The guys in the video figured out that more and more packs contained more and more bad loans (the local bans would lend huge amounts of money to people with bad credit history and they would buy overpriced houses, thus they couldn't make their payments and big banks bought them just to sell them fast to the next sucker). When they figured it, they took insurance saying: if the packs won't turn a profit, pay us a sum of money that covers our losses and turns a profit for us. For the isurance to work, they paid tens of millions to the insurance companies and waited for the price of the houses to fall abruptly. In 2007-2008 the prices of houses fell greatly and many people were unable or unwilling to make payment and defaulted on the loan en-masse (for 1000 in a pack, 600 or 800 defaulted) and as the packs wouldn't return money, the hedge funds, investment companies and banks started to not get paid for what they gave for the packs and some went bankrupt. The ones taht took insurance against the packs, had to be paid in full by the insurance companies and they were paid when the Congress voted to send money to the insurance companies to pay their policies and the insured parties got away from the crisis scot-free. tl;dr - small banks gave bad mortgages, those got bought by big banks, big banks clump thousands of loans into packs and sell the packs to investors. Mortgages default en-masse and cause the investors to lose everything (except for those insured). Hope this helps, I tried to simplify this as much as I could

@@andrekovski Thanks, I must've not payed enough attention. I knew finance world was/is fucked up, but didn't expect it to be so damn stupid

The CDOs served to artificially deflate interest rates for mortgages and other real estate loans because of the institutional demand for relatively high yield bonds. It was effectively impossible for the buyers to do their due diligence. It’s crazy how this disaster of a financial “innovation” screwed over the economy for a good decade if not longer

That is how the market works... you pay for the opinion of others. If the big players doesn't think stock ABC will go up, than it wont because they don't buy it. That is the risk.... luckily we can short🤷🏻‍♂️

1) Nothing happens, you just have a share and no money. 2) If no one buys, then the price will go to 0 as holders try to undercut eachother to sell.

Federal Reserve? Fannie Mae, Freddie Mac, & House Financial Services Committee were up to their ears in this.

Regans vision, enacted by Clinton of all people, required by law that banks lower their lending standards in an attempt to get 50% of the population into their own home, up from 40-some percent. Because they determined that homeowners were more responsible and less prone to crime. As if making more renters own homes will solve this fundamental issue. The banks refused in the early 90s. But were GRANTED a GUARANTEE by the government to be bailed out if everything went as badly as they feared. Lol!

Firnds don't let frineds listen to terrible music. It's just sad.

Lol wut

Its like when you make a bet in blackjack.. you havnt won yet but you can have insurance

Evil happens in the absence of good and there is a huge absence of good in these dealings dont kid yourself son the world will eat you

Because that's not true. That's new age poppy cock. Even eastern religions that say there's no evil teach you to fight evil. There's no one on the planet that can argue that torturing and raping a child isn't evil. There is no relativity there. I don't know how you don't understand this.

Stay strong Ukraine!